New Delhi, Dec. 31: You just had a very prosperous year.
India entered 2004 with the sharpest growth in the economy in any quarter since liberalisation began in 1991. The promise for the year just begun is better.
As the chill and fog descended over Raisina Hill on the last day of 2003, the Vajpayee government basked in the warmth of a fiery 8.4 per cent growth in the second quarter (July-September) of this financial year.
Eager to spread the cheer from the latest in a string of feel-good factors, the government broke with convention to put the news out on the very last day of the year. It usually comes in early January.
Only 10 days ago, finance minister Jaswant Singh’s team was cock-a-hoop over the fact that the country’s foreign exchange reserves had crossed the $100-billion mark.
The celebratory mood on Raisina Hill, which houses the main offices of the government, could almost be touched today.
Only the other day, Jaswant Singh said he was bothered more with the gross national satisfaction (GNS) than the gross domestic product (GDP).
Whatever the GNS might be, today’s 8.4 per cent GDP growth announcement will raise the satisfaction level in the BJP as it shifts into election gear to ride the “feel-good” train back to Delhi for another five years.
Data released by the Central Statistical Organisation showed that the pace of growth in July-September was just a tick behind rival China’s 9.1 per cent, making India the second-fastest growing economy in the world.
The stock market celebrated, driving the sensex – the barometer of the mood – to a nearly four-year high. The index closed at 5838.96, clocking a gain of 72 per cent in 365 days.
The BJP — which won a resounding mandate in the recent elections in three northern states and put it down to its slogan of development and governance — has a fine economic report card to show.
Whether the star marks are a result of its governing brilliance will be as hard to establish as the level of the GNS. But the government of the day suffers or benefits, depending on how the economy behaves.
There are some downers as well — notably the surge in inflation which is currently running at 5.57 per cent — but the shoguns in the finance ministry and the Reserve Bank of India reckon that it will be reined in at 4 per cent by the end of this financial year ending March 31.
As of now, no one quite cares if that will happen or not, such is the euphoria over the strong economic fundamentals.
“We predicted that the year will end with a GDP growth of not less than 7.5 per cent — and that, too, when the first quarter figures were not too hot,” said Y.K. Modi, who takes over as president of the Federation of Indian Chambers of Commerce and Industry early next year.
“But the second quarter results underpin the fact that India can grow at a constant 8 per cent.”
Cheery optimists are already coming out of the woodwork: the Confederation of Indian Industry — the other apex industry organisation — predicted that GDP growth in the third quarter (October-December) would probably touch 9 per cent.
In the mid-year review in October, the Reserve Bank and the government had forecast a full-year growth of between 6.5 and 7 per cent, which now looks conservative. Some private economists and industry bodies have estimated an 8 per cent full-year growth.
A.C. Muthiah, the Ficci president who will hand over the baton to Modi, said: “Once the tempo generated by the strong agricultural growth is maintained, the tenth plan growth target of 8 per cent could be met comfortably.”
It has been shown in a survey that 74 per cent of the chief executives of companies in India expect over 10 per cent growth in sales this financial year.
The economy has been underpinned by the strong growth in agriculture and manufacturing — the two sectors that have languished in the past few years.
The highest GDP growth since 1991 was recorded in 1996-97 at 7.8 per cent. It has been downhill since, with the nadir touched last year when the economy grew just 4.4 per cent.
As the heart-warming growth story unfolded, there was one small piece of news: 194 people have died so far this winter of cold.